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Synopsis Synopsis - 1 SYNOPSIS 1.1 Basic Introduction BPO! One reads the word and myriad of well-groomed youth on calls, fast money, and phenomenal lifestyles seem to flash the mind in a jiffy. That’s just the start. One reads it again, contemplates over it, dives into the unveiled afflictions, and gives it a second thought and a completely differing depiction blazes the mind. Lopsided working hours, unimaginable attrition rate, stress and burnout exhibit its ugly side. No matter how the seesaw balances between the pros and cons, the fact remains conspicuous, loud and unchanged. BPO, Business Process Outsourcing, is the mantra of employment, the buzz of present, and the promise of future! The last decade saw an upheaval in the growth and development of the Indian economy, which was accompanied by the revolution in the technological front and a radical change in the way businesses were done. Instead of being the jack of all trades, the smart organizations have now redefined the way of working and now aim at being the master of their core business. Outsourcing the non-core processes in order to concentrate on the core ones is how the companies prefer to work now. BPO has become the obvious strategic choice of the companies looking at the visible profits of cost reduction while improving the quality of service, increasing shareholder value etc. [1]. With the whirlpool of opportunities the Indian Business Process Outsourcing sector seems to be on a happy ride. It has emerged rapidly, and its exports have grown from $565 million in 2000 to about $7.3 billion in 2005 [64]. With the boat steaming ahead in the global markets, India has already become the most privileged destination. Hence such an eternal inventory of opportunities simply showcases a phenomenon which is no less than the renaissance for our Indian markets. Today, India is the hottest destination for any company that wants to outsource its business processes. From a negligible size in early 2000 to a gigantic size today, the BPO sector has been growing at an unprecedented rate. In 2003, India accounted for 75 percent of the total BPO offshore delivery value that was expected to increase by 55 percent annually over the next five years (Neale 2004). According to Scholl et al., India’s revenue from BPO operations was expected to grow from approximately $1 billion in 2002 to $13.8 billion in 2007 and its share of supply was projected to be 57 percent of the offshore BPO market [4]. According to Nasscom, the Indian IT-BPO industry (including domestic market) recorded an overall growth of 28 per cent (currency adjusted), clocking revenues of $52 billion in FY07-08 up from $39.6 billion in FY06-07. 2008 was a year of revolution for the Indian IT – BPO sector as it began to re-engineer challenges posed by macro-economic environment, with the

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Page 1: SYNOPSIS - Shodhganga : a reservoir of Indian theses ...shodhganga.inflibnet.ac.in/.../10603/2696/19/19_synopsis.pdfSynopsis Synopsis - 5 certain management decisions. The model should

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SYNOPSIS 1.1 Basic Introduction

BPO! One reads the word and myriad of well-groomed youth on calls, fast money, and phenomenal

lifestyles seem to flash the mind in a jiffy. That’s just the start. One reads it again, contemplates over

it, dives into the unveiled afflictions, and gives it a second thought and a completely differing

depiction blazes the mind. Lopsided working hours, unimaginable attrition rate, stress and burnout

exhibit its ugly side. No matter how the seesaw balances between the pros and cons, the fact remains

conspicuous, loud and unchanged. BPO, Business Process Outsourcing, is the mantra of employment,

the buzz of present, and the promise of future!

The last decade saw an upheaval in the growth and development of the Indian economy, which was

accompanied by the revolution in the technological front and a radical change in the way businesses

were done. Instead of being the jack of all trades, the smart organizations have now redefined the way

of working and now aim at being the master of their core business. Outsourcing the non-core

processes in order to concentrate on the core ones is how the companies prefer to work now. BPO has

become the obvious strategic choice of the companies looking at the visible profits of cost reduction

while improving the quality of service, increasing shareholder value etc. [1]. With the whirlpool of

opportunities the Indian Business Process Outsourcing sector seems to be on a happy ride. It has

emerged rapidly, and its exports have grown from $565 million in 2000 to about $7.3 billion in 2005

[64]. With the boat steaming ahead in the global markets, India has already become the most

privileged destination. Hence such an eternal inventory of opportunities simply showcases a

phenomenon which is no less than the renaissance for our Indian markets.

Today, India is the hottest destination for any company that wants to outsource its business processes.

From a negligible size in early 2000 to a gigantic size today, the BPO sector has been growing at an

unprecedented rate. In 2003, India accounted for 75 percent of the total BPO offshore delivery value

that was expected to increase by 55 percent annually over the next five years (Neale 2004). According

to Scholl et al., India’s revenue from BPO operations was expected to grow from approximately $1

billion in 2002 to $13.8 billion in 2007 and its share of supply was projected to be 57 percent of the

offshore BPO market [4]. According to Nasscom, the Indian IT-BPO industry (including domestic

market) recorded an overall growth of 28 per cent (currency adjusted), clocking revenues of $52

billion in FY07-08 up from $39.6 billion in FY06-07. 2008 was a year of revolution for the Indian IT

– BPO sector as it began to re-engineer challenges posed by macro-economic environment, with the

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worldwide spending aggregate expected to reach nearly USD 1.6 trillion, a growth of 5.6 per cent over

the previous year. The BPO exports are up by 30 per cent (in US dollars), registering revenues of

$10.9 billion [9]. Indian IT-BPO grew by 12 per cent in FY2009 to reach USD 71.7 billion in

aggregate revenue. Software and services exports (includes exports of IT services, BPO, Engineering

Services and R&D and Software products) reached USD 47 billion, contributing nearly 66 per cent to

the overall IT-BPO revenue aggregate. IT-BPO exports (including hardware exports) reached USD

47.3 billion in FY2009 as against USD 40.9 billion in FY2008, a growth of 16 per cent. Contrary to

the sunny side of the story, we have a dark side of the BPO too.

The flip side of the BPOs revolves around the host of challenges that they have been facing since their

very inception. The major challenges being faced by the BPO industry in India can be classified into

internal and external challenges. The internal challenges include shortage of competent managers for

the middle and senior management and the high attrition rates. The external challenge is in the form of

opposition from the US politicians and the UK labor unions against shifting of the BPO operations by

local companies to India. One of the most significant internal challenges is high attrition rates.

Attrition refers to a gradual, natural reduction in membership or personnel, as through retirement,

resignation, or death (National Performance Review 1997). It means not only loss of talent, but also

includes the cost of training the new recruits. According to Mehta et al., of all the challenges posed to

BPO organizations at various levels, attrition, absenteeism and motivating employees are the major

ones that dominate at the middle level [7]. The attrition rate in the industry has been hovering around

35%, which is quite high for any industry. An average Indian call center employee works with a

company for 11 months, where as an average UK call center employee stays in a company for 3 years.

According to some analysts [8], in general, the attrition rate fluctuates between 20% and 40%, while in

the best companies, it averages around 15%. As per NASSCOM report, the outsourcing industry

would have a shortage of 262,000 professionals by 2012 [5]. Despite potential for tremendous growth,

BPO industry continues to suffer from high level of attrition stemming from factors like high levels of

stress and lack of opportunities for growth. Attrition in BPO, though varying from industry to industry

has reached an all-time high level of nearly 60% [8].

Attrition in BPOs has terrible effects on the organization. The high attrition costs increases the costs to

the organization considerably. They have to combat the amount of disruption due to unplanned exits.

The more the people leave an organization, the more it is a drain on the company’s resources like

recruitment expenses, training and orientation resources and the time. The high attrition rate also

affects the productivity of the organization. Therefore, it is extremely important to curb attrition not

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only for an individual firm but also for the industry as a whole. Many researchers have worked

enormously on the BPO sector, citing its challenges, issues, and opportunities in and around employee

performance, employee satisfaction, employee turnover etc.

1.2 Need of the research

Most research in the BPO sector has addressed only specific problems related to its environmental

analysis like challenges, growth and opportunities, the problem of attrition, the HRM systems, and

issues of job stress, job satisfaction, individual performance etc. Literature review has also shown how

various researchers have identified a plethora of reasons behind the escalating problem of attrition and

how many of them have even suggested recommendations to combat it [20] [21] [22]. Many

researchers have also worked on various domains like the HRM systems and practices [2], job

satisfaction [23] [24], and burnout prevention [25]. Most of the research on Indian call centres is based

upon qualitative approaches involving small numbers of workers [2] [12] [26] [27] [28]. Broader

based survey research has been restricted to managerial surveys [15]. Presumably due to the

difficulties in gaining research access to BPO, employee voice on a larger scale has been absent from

much of the existent literature, although recent work is beginning to address this deficit [29]. The few

studies that have canvassed employee perceptions of their work have either relied upon very small

samples [26] or upon small numbers of workers spread across a larger number of organizations [2].

Research done in the area of employee motivation and satisfaction has discussed domains like

education [23] [30], private public employment [31], financial institutes [32], ITES industry [33], oil

industry [34], government ministries [35], labor market [36], to name a few but not much inclusive

and structured work has been done in the domain of BPO sector. Thus, no systematic and

comprehensive work has been found that collaborates both the facets viz. attrition and retention, and

how employee motivation, employee satisfaction, employee involvement can be used to combat the

most smoldering problem of the present times i.e. attrition. Another interesting thing that emerged

from prior researches and focused group interviews taken for pilot survey is that reducing attrition

may not always mean increasing retention. Attrition may reduce if the negative characteristics of the

job are taken care of. However, that does not mean employees increase their willingness to stay in the

same organization. Thus different set of factors emerged for attrition and retention respectively.

Looking at the big picture of the much realized potential of the BPO industry in India and the

impending curse of attrition in this sector, it can be confidently said that the problem can not be

overlooked. There is a dire need of tackling the problem of attrition in the BPO industry of India and

for this employee motivation has been chosen as an effective tool. There is need to develop a

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concurrent strategic method, an innovative development paradigm that can be utilized to curb the ever-

increasing attrition rate in the BPO industry. Thus the need for this study can be clearly defined in two

points:

1. Attrition is a burning problem for the promising industry of BPO, especially because it fails to tap

the full utilization of the human resources and wastes much of its time, money and resources due to

this.

2. Dearth of motivation among the BPO employees is one of the bitter truths that is responsible for

the attrition in this sector, and it is time we enhanced it in the BPO sector.

1.3 Aim of the research

This research aims to produce a model for employee retention conjoining it with other aspects of

perceived attitudes viz. employee motivation, employee satisfaction, employee involvement and life

interest and work compatibility etc. To attain the aim of the research, the Hackman and Oldham’s Job

Characteristics model (1976) was taken as the basic foundation. Hackman & Oldham (1976) proposed

the Job Characteristics Model, which is widely used as a framework to study how particular job

characteristics impact on job outcomes, including job satisfaction. The model states that there are five

core job characteristics (skill variety, task identity, task significance, autonomy, and feedback) which

impact three critical psychological states (experienced meaningfulness, experienced responsibility for

outcomes, and knowledge of the actual results), in turn influencing work outcomes (job satisfaction,

absenteeism, work motivation, etc). The basic hypothesis of this research that employee motivation,

employee satisfaction, employee involvement, and life interest and work compatibility lead to

prolonged sustenance is an extension of this model with minor modifications in it. It is proposed that

the Job Characteristics model is modified by redefining job dimensions as growth prospects,

accountability, sense of accomplishment, self-esteem, job security, interpersonal relationships,

working conditions, by extending organizational outcomes as satisfied, motivated, involved and

retained employees. Figure 1 is the modified Hackman and Oldham’s Job Characteristics model which

has been taken as the base to study the research questions pertaining to this research. The new model

is also designed to be of use as a management tool and must therefore be simple and flexible enough

to be of use to the management of an organization. Typical management questions would involve the

likely motivational impact of job redesign, such as increasing employees’ level of control and

responsibility over their work behavior or introducing a scheme whereby employees participate in

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certain management decisions. The model should therefore allow managers to manipulate a host of job

characteristics and investigate the likely effects upon the motivation, performance and sustenance of

the workforce. This study aimed at exploring the dimensions of attrition and retention. Based on our

ground work; initial survey and personal interviews held with the BPO employees, it was found that

factors that contribute to attrition are quite different from the factors that contribute to retention. Thus

based on this, we developed two basic models of our research as shown in figure 2 and figure 3.

Figure 1.4: Modified Hackman and Oldham’s Job Characteristics Model

Figure 1: Modified version of Hackman and Oldham’s Job Characteristics Model

Based on the Hackman and Oldham’s Job Characteristics Model and the modifications made to it, a

clearer and more lucid pictorial framework of the model is given in Figure 2 and 3. Figure 2 clearly

illustrates the basic constructs of the attrition model: personal characteristics, negative job

Skill Variety Experienced meaningfulness High internal Task Identity of the work work motivation Task Significance

High quality of work performances

Autonomy Experienced responsibility for outcomes of the work

High satisfaction with the work

Feedback Knowledge of the actual Low absenteeism and

results of the work activities turnover

Growth Prospects High Work Motivation Satisfied Employees

Participation

Accountability

Feeling of accomplishment High Satisfaction with work Motivated Employees

Job Security

Self-Esteem

Prestige inside and outside Involved Employees

Amenities High Involvement with work

Authority

Involvement Retained Employees

Interpersonal relationships

Working Conditions

Core Job Dimensions

Critical Psychological States

Personal and Work Outcomes

Organizational Outcomes

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characteristics (job dimensions), and the final resultant as attrition. Figure 3 illustrates constructs of

retention model i.e. personal characteristics, intrinsic job dimensions and the resulting level of

satisfaction, motivation and involvement (work outcomes) and the final result i.e. retained employees

(organizational outcomes).

Figure 2: Basic model for attrition

Figure 2 clearly suggests the personal characteristics as age, education, gender, marital status and

tenure along with the negative characteristics of a BPO job i.e. monotonous nature of job, lack of

motivation, poor mentoring, power and politics, dissatisfaction with colleagues, low career growth,

lack of skill variety, irregular working hours, achievement not recognized etc. These two collectively

result in the attrition of employees. The question is how much do these factors actually contribute to

attrition. Similarly figure 3 describes the personal characteristics and core job dimensions which are

intrinsic in nature and how do they contribute to retention of employees.

Gender Education 

Marital Status Age 

Tenure

Attrition of Employees

Personal Characteristics

Monotonous nature of job 

Lack of motivation 

Poor mentoring 

Power and politics 

Dissatisfaction with colleagues 

Low career growth 

Lack of skill variety 

Irregular working hours 

Achievement not recognized

Negative characteristics of a BPO job

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Gender

Education

Marital Status

Age

Retention of

Employees

(Organizational

Outcome)

Personal Characteristics

Self-Esteem

Participation

Accountability

Growth Prospects

Feeling of

accomplishment

Prestige inside and

outside

Interpersonal

relationships

Working

Conditions

Involvement

Job Security

Amenities

Authority

Job Characteristics

(Core Job Dimensions)

Satisfaction Motivation

Involvement Life interest

and work compatibility

Figure 3: Basic model for retention of employees

1.4 Objectives of the study

The major motivation of this thesis is derived from the studies of Mehta et al. (2006), Budhwar et al.

(2006), Shah and Sharma (2007), Misra (2007). It is clear from the review of earlier research that

solutions are required to some specific problems of practical importance in the field of escalating

attrition in BPOs. The broad objective of this thesis is to identify the root causes of attrition in BPOs,

analyzing the level of employee motivation, satisfaction and involvement, generate a model for

maximizing sustenance of employees in the organization and come up with concrete

recommendations, which will eventually be valuable to the organizations to retain their employees for

a long term. The specific objectives of this thesis are:

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1. To identify and rank the factors of attrition in BPOs based on accumulative literature review and

secondary data.

2. To explore and analyze the dimensions of attrition in BPOs based on primary data collected from

field survey.

3. To identify and explore the dimensions of employee retention in BPOs based on primary data

collected from field survey.

4. To develop a regression model for escalating the stay of employees in BPOs and give

recommendations for the same.

5. To assess the existing level of employee motivation and validate the model by studying the impact

of recommendations on a small patch.

1.5 Research Methodology

The general intent of this descriptive study was threefold. Therefore a systematic and organized

methodology was obtained for the research study. A survey design was used to obtain the required

information. The population for this study comprised of employees working in various BPOs in the

National Capital Region. A sample size of 500 was chosen for this study. Simple random sampling

technique was used to gather data from the respondents, because of which respondents diverged from

every age group, gender, organization, marital status etc. but were restricted only to low and middle

level employees, where the attrition is highest. The questionnaire was intricately designed to tap the

demographic variables including age, education, gender, marital status, and tenure of the respondents.

It also gathered information about the factors responsible for attrition, the factors that can be employed

to retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and life

interest and work compatibility. Main data collection began in the month of July 2008. Statistical

Package for the Social Sciences (SPSS) version 17.0 was religiously used for the statistical analyses.

1.6 Significance of the Study

The significance of the study lies in the detonation of the BPO industry in the recent years. Where on

one hand the sector is growing with leaps and bounds, on the other the employee turnover has been

alarmingly high, thus costing a lot to the company. The middle level and low level employees are

victims of dearth of motivation and employee satisfaction also seems to be brandishing. The study is

an attempt to assess the patterns of attrition in BPO and analyze the relationship among employee

motivation, job satisfaction and employee retention, so as to utilize employee motivation to retain

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employees in an organization. Thus, not only is it significant for academicians but also for

professionals who can exploit it to control the employee turnover.

1.7 Scope of the study

Although the development of motivation model to tackle the problem of attrition in the BPO sector has

inputs from a variety of sources including primary and secondary sources, the study is confined to the

data collected from the national capital region of India. Moreover, only selected facets of job

characteristics have been considered for the study. There are many which can be included in order to

assess employee motivation. Therefore the scope of the study is limited to the geographical location of

the sample size and also to the selected dimensions of personal characteristics and employee

motivation.

2. Literature Review

2.1 Introduction

With the boat of success steaming ahead in the global markets, India has already become the most

privileged destination for Business Process Outsourcing. The word which one would simply lisp in the

beginning of this century has become the most pronounced and sought after term. Generating

revenues, fostering employments, elevating the living standards, an eternal inventory of opportunities

simply showcase a phenomenon which is no less than the renaissance for our Indian markets. Many

researchers have talked about BPOs in their works, highlighted its capability as money making sector,

showcased its doom of high employee turnover, sketched out its strengths, weaknesses, opportunities

and threats, and also chalked out its dynamics of HR. Other researchers have extensively worked on

various perceived attitudes of employees like their satisfaction, motivation, its influence on their

tenure, their loyalty, commitment etc. This chapter unfolds all the relevant literature about the BPO

industry in India, theories and research works of employee motivation and satisfaction, and

collaborates the findings to tackle the problem of attrition in this sector.

2.2 BPO: An overview

Grossman and Helpman’s statement, “We live in an age of outsourcing,” clearly designates that

outsourcing has now become an acknowledged, accepted and established business strategy [38]. One

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of the most familiar forms of outsourcing is business process outsourcing i.e., transferring the

operational ownership of one or more of the firm’s business processes to an external supplier that, in

turn, administers the processes according to some predefined metrics [39] [40]. BPO or Business

Process Outsourcing thus refers to the rearrangement of entire business functions to some other service

providers, primarily in low cost locations. The service provider may be either self-owned or a third

party. This relocation or transferring of business processes to an external provider is essentially to

accomplish increased shareholder value.

Some of the general services provided by the BPOs are Receivables and Payables, Inventory

Management, Order Processing, Cash flow Analysis, Reconciliation, Data Entry, Payroll Processing,

QuickBooks Accounting, Financial Statement Preparation and Accounting Services. Some of the web

based services include live online sales and order entry, E-commerce transaction support, Live online

enquiry handling, Web Design/Development.

2.2.1 Market Size of BPO in India

Speedy transformation is taking place in the global BPO market. It is escorted by increased

investments in BPO services. Most of the principal business companies of the world are adopting BPO

as a strategic business solution. The BPO industry is quite assorted, with several sub-segments, each

exhibiting its own unique and exclusive characteristics. The size of the global BPO market was

projected to be $173bn by 2007, of which $24.23bn would be outsourced to offshore contractors [40].

Of this, India has the potential to generate $13.8bn in revenue. "The projection includes revenues of

pure play Indian BPO service providers, captives operations of MNCs operating in India, third party

service providers and BPO subsidiaries of IT services firms.

2.2.2 Growth of Indian BPO Industry

BPO is a varied and speedily growing offshore market with an estimated annual growth rate of 60

percent [61]. Brown and Stone reported that BPO accounted for 34 percent of the global outsourcing

contract value in 2004 and estimated that BPO services would grow from $1.3 billion in 2002 to $4.3

billion in 2007 [36]. The Indian BPO sector has emerged rapidly, and its exports have grown from

$565 million in 2000 to about $7.3 billion in 2005. These exports were projected to increase to $20

billion by 2007 and employment in the sector was expected to rise from its current level of 300,000 to

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over 1.1 million by 2008 [62] [63]. The first NASSCOM-McKinsey study (Indian IT Strategy, 1999)

had set an ambition of USD 50 million in exports by 2008, and as a matter of fact, the industry has

been on track to achieve this figure. The aspiration for 2010 however, is expected to witness a delay of

three to four quarters on account of the global meltdown. The IT-BPO industry has traveled from a

USD 4 billion sector in 1998 to a breath-taking USD 52 billion in 2008 employing over 2 million

people [63]. Looking at the hit side of the fabulous growth of the BPO industry, a number of leading

software service companies also made a foray into the BPO domain, either directly, or through the

mergers and acquisitions route. Most Indian IT leaders today such as Wipro, Patni, Satyam, HCL,

among others, have presence in this market. The segments like customer care and administration

showed a promising growth of over 75% which was the highest among all.

2008 was a year of transformation for the Indian IT – BPO sector as it began to re-engineer challenges

posed by macro-economic environment, with the worldwide spending aggregate estimated to reach

nearly USD 1.6 trillion, a growth of 5.6 per cent over the previous year. In the global market, software

and services touched USD 967 billion, an above average growth of 6.3 per cent over past year and the

worldwide BPO grew by 12 per cent, the highest among all technology related segments. 2008 was a

strong year as number of contracts, total contract value and annualized; and contract values exceeded

as compared to 2007. Among all users above average growth was witnessed in the Government,

Healthcare and manufacturing segments [63]. Indian IT-BPO grew by 12 per cent in FY2009 to reach

USD 71.7 billion in aggregate revenue

2.2.3 Attrition in BPO

Attrition is defined as a reduction in the number of employees through retirement, resignation or death

and attrition rate is defined as the rate of shrinkage in size or number. Attrition of employees in a

limited measure is desirable for influx of new ideas in any type of organization. It helps organizations

to maintain their agility in fast changing environment. It brings in new blood, opens up new vistas for

change, development and improvement, shows avenues to expand operations and add to the creative

lines of the organizations. Attrition in a limited measure can thus bring gains to the organization.

However if attrition increases beyond a certain level, the gains are transformed into pains. Recruiters

explain that high attrition rates significantly increase the investment made on employees [21].

Significant investments in time and money need to be made for acquiring employees in any

organization. These can never be translated into profit when attrition is high.

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There is an escalating paucity of the appropriate skills gained through the education system, which is

short on quality and relevance. Because of dearth, hiring new talent has become more expensive. In

1999, the average pay packet of an entry-level agent was $160–$180; now it is $300–$350. Due to

high attrition rates, every employee who leaves costs the company another $900–$1100 to recruit and

train a replacement. Finding the right candidate and sustaining it is now becoming a problem. Years

ago, the success rate was of choosing the right candidate was 20 percent [72] [73] [74]. Besides this,

BPO employees are experiencing problems related to stress, sexual and racial abuse, and

dissatisfaction at work [75] [76] [77] [78] [80]. Inside a BPO organization, HR related issues arising at

all levels have become significantly alarming and need to be addressed soon. Major HR-related issues

standing as problems in the various levels of management include attrition, HR policies, absenteeism,

performance appraisal, and manpower allocation [7]. In organizing, the major concerns at the lower

management level are related to job design and job requirements, like night shifts, monotony, and long

hours. At the middle-management level, critical issues were related to HR, organizing, and motivation.

Middle-level managers have difficulty retaining good employees, motivating them to put in their best

effort, and keeping them happy. Often managers are not trained to work with teams and directing and

motivating numerous teams simultaneously is challenging [7].

Attrition in the BPO industry is two fold. One part of the attrition is where the employee leaves the

industry entirely. The other section of attrition is where the employee joins another firm in the

industry. Both the sections have separate reasons which need to be identified. The primary reason for

people leaving the industry is due to the cause that the industry is viewed as a gap filler occupation.

There seems to be a flaw in the way the industry is structured. The industry has been mainly

dependent on youth who take out time to work, make money in the process while thinking of career

alternatives. Hence for this group BPO is never a long term career but only as a part time job. The easy

availability of BPO jobs is only a source of easy money till the time there is no other source of

funding. Also the unfriendly working conditions, late night work shifts, high tension jobs acts as a

deterrent for people to stick to this industry for long time. In addition, the BPO jobs are not being

taken with a positive spirit by the society on a large. Research says that nearly 50 per cent of those

who quit leave the industry [21].

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2.3 Employee Motivation

Employee motivation has been extensively reviewed for this research. Literature on the established

well known motivation theories has been reviewed as one of the final results of our study shows

intrinsic motivation factors as a significant dimension of employee retention in the BPO industry.

Theories of motivation were intricately studied to understand the concept of motivation as an

important predictor of employee turnover. Motivation theories have been broadly classified into need

based theories and process based theories. These theories form the pedestal of all work on motivation.

Here these theories have been discussed to understand the philosophy of motivation so as to

incorporate the same in the study of employee retention. Johnson and Gill describe motivation in work

organizations as “the processes by which people are enabled to and induced to choose to behave in

particular ways” [93]. Motivation is therefore coupled with a search for the ways by which members’

job performance and productivity may be enhanced or maintain.

2.4 Employee Involvement

Literature on employee involvement was also extensively reviewed as one of the significant

determinants of employee retention came out as involvement factors. Many researchers have worked

on employee involvement and participation at various levels and in various domains. Employee

involvement is an important attribute of job satisfaction, employee motivation and even employee

retention. Employee involvement has a direct correlation with productivity, quality, efficiency,

absenteeism, and even motivation. Employee involvement has received much attention in the area of

work organization in recent decades. Although changes in the work organization during the last

decades are diverse and difficult to summarize by a few key concepts, there has emerged an agreement

that employee involvement and monetary incentive systems are important measures in modern

personnel management [116] [117] [118]. Addison et al. shows that establishments of different sizes

might be affected differently by employee involvement [119]. Employee involvement produces

improved enterprise performance through diverse channels including enhanced discretionary effort by

employees [121]. There is also a high association between peer review and employee involvement in

work organization and better the peer review, better is the efficiency towards work. Employee

involvement also affects the important dimensions of individual performance, organizational

citizenship behavior, defined as individual discretionary behavior that promotes the organization and

is not explicitly rewarded. The main principle behind all initiatives for increasing the involvement of

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workers is to get the lower-level staff more involved in the decision making and work processes, and

to grant these employees greater autonomy and control over job tasks and methods of work [122].

Typical measures are teamwork, lean management, and reduced hierarchic levels [118].

2.5 Hackman and Oldham’s Job characteristics model

Hackman and Oldham’s Job characteristics model has been used to develop the conceptual model for

the research. The Job Characteristics Model by Hackman and Oldham focuses on the interaction

between the psychological states of employees, the job characteristics that are believed to determine

these states and the attributes of individuals that determine how positively a person will respond to a

complex and challenging job [37]. Few of the aspects of the model have been amended with reasons.

This amended model then generates a base for the theoretical skeleton of the research model.

2.6 Conceptual Model of the research

The Hackman and Oldham’s Job Characteristics Model was taken as the foundation to generate a

conceptual model for the research. The three psychological states applied in the model are experienced

meaningfulness of the work; experienced responsibility for the outcomes of the work and knowledge

of the actual results of the work activities. All these can be purely classed as intrinsic to the job itself.

Consequently, the model predicts only intrinsic (internal) motivation. The effects of extrinsic rewards,

such as pay and other benefits, self-esteem, job security, hours of work and working conditions, etc.

and the resulting extrinsic motivation are ignored. Moreover, there are several job dimensions that

have been found to have an effect on worker satisfaction and motivation that are not included in

Hackman and Oldham’s formulation of the model. It may also be argued that personal and work

outcomes need to be amended. The outcomes limit to high internal work motivation, high quality of

work performances, high satisfaction with work, and low absenteeism and turnover. It may be noted

here that along with personal outcomes as mentioned here, involvement with work may also breed as a

result of the critical psychological states. The personal and work outcomes may be redefined as high

work motivation, high work satisfaction and high work involvement. If this be the case, it may result

in organizational outcomes too. Organization outcome will be a chain of events, wherein the

organization cultivates satisfied employees; who feel motivated; show high involvement and hence

retains employees.

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The research aims to find out the factors that cause attrition, how do these dimensions vary across the

personal characteristics, what factors actually contribute to attrition. Similarly, it studies whether

satisfaction, motivation and involvement enhance the stay of an employee in the organization. Thus,

based on our literature review, we assume that personal characteristics and job characteristics together

lead to the level of satisfaction, motivation and involvement in an employee, which further leads to

their sustenance in the organization for a long term.

3. Research Methodology

The general intent of this descriptive study was threefold. Therefore a systematic and organized

methodology was obtained for the research study. A survey design was used to obtain the required

information. The population for this study comprised of employees working in various BPOs in the

National Capital Region. A sample size of 500 was chosen for this study. Simple random sampling

technique was used to gather data from the respondents, because of which respondents diverged from

every age group, gender, organization, marital status etc. but were restricted only to low and middle

level employees, where the attrition is highest. The questionnaire was intricately designed to tap the

demographic variables including age, education, gender, marital status, and tenure of the respondents.

It also gathered information about the factors responsible for attrition, the factors that can be employed

to retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and life

interest and work compatibility. Main data collection began in the month of July 2008. Statistical

Package for the Social Sciences (SPSS) version 17.0 was religiously used for the statistical analyses.

A questionnaire was intricately designed to tap the factors responsible for attrition, the factors that are

expected to be present in a specific job for retention. The instrument was divided into 4 parts. The first

part gathered information about the personal profile of the respondents which included their age,

gender, education, marital status, and tenure. Part II consisted of questions about their reasons for

change or probable change in their jobs. Part III aimed at knowing what according to the respondents

is important for their sustenance in an organization. And last of all, Part IV was about their overall

perception of the work which included their level of satisfaction, level of motivation, level of

involvement and level of life interest and work compatibility.

To test the validity of the instrument, a pilot study was done on 100 participants in the month of

January 2008. Based on their responses, validity tests were done to check for the validity and usability

of the instrument. Cronbach alpha, KMO measure of adequacy and Bartlett’s test of sphericity were

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conducted. Cronbach alpha was calculated to measure the internal consistency reliability of the

instrument. The cronbach alpha came as 0.898 for Part II and 0.963 for Part III thus the instrument

was considered reliable for the study. Kaiser-Meyer-Olkin test was done to measure the homogeneity

of variables and Bartlett's test of sphericity was done to test for the correlation among the variables

used. The KMO value for part I of the instrument was 0.745, and for part II was 0.767, both of which

are acceptable as a middling value. The Bartlett’s test showed significant results for both the parts and

hence the instrument was accepted for further study. Table 1 summarizes the entire result viz.

cronbach alpha, KMO test values, and Bartletts’s significance of the instrument. On getting quite

meritorious results of the validity, the instrument was floated for data collection.

Table 1: Tests of Validity of the questionnaire No. of

items Cronbach’s Alpha

Kaiser-Meyer-Olkin Measure of Sampling Adequacy

Bartlett's Test of Sphericity

Approx. Chi-Square 6052.012

df 210.000 Part II 21 .898 .745

Sig. .000 Approx.

Chi-Square 12554.051

df 190.000 Part III 20 .963 .767

Sig. .000

4. Exploring the dimensions of attrition in the BPO industry

4.1 Secondary Data Analysis

In order to gain a deeper understanding about the phenomenon of high attrition, and identification of

the factors behind it, a lot of literature on BPO, particularly what got published during 2004 and 2005

was studied in detail. Major causal factors for high attrition in Indian BPO industry identified in this

study were based on qualitative research using secondary data. These were compared with causal

factors for attrition identified through personal interview with a number of BPO employees in the

NCR. There was a close similarity between the two results, authenticating the qualitative research on

causal agents for attrition identified in this study. The study ranked low perceived value and

monotonous work as number one factor attrition. Rank two was shared by high salary expectation and

unusual working hours. Next factor was disillusioned employees; rank four was shared by stress and

burnout, pressure to perform on metrics, and lack of motivation. Finally rank five was jointly shared

by lack of security and social interaction.

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Table 2: Summary of ranks from secondary study

Causal Agents / Factors Score (on 1) (Rank)

Higher Salary Expectation 0.7 (Rank-II)

Lack of Security 0.3 (Rank-V)

Lack of Social Interaction 0.3 (Rank-V)

Monotonous Work 0.8 (Rank-I) Unusual Working Hours 0.7 (Rank-II)

Pressure to perform on Metrics 0.5 (Rank-IV)

Low Perceived Value 0.8 (Rank-I)

Disillusioned Employees 0.6 (Rank-III)

Stress and Burnout 0.5 (Rank-IV)

Lack of Motivation 0.5 (Rank-IV)

On the basis of these ranks and factors, an interesting inference was drawn. Low perceived value

stands out as the most significant factor for attrition. Increased dissatisfaction leads to reduced

motivation, which in turn results in lowered efficiency. When the efficiency is lowered, employees are

not able to deliver their expected output which results in their leaving the job. When employees quit,

the perceived value is further lowered. Thus a vicious circle is formed as shown in figure 4.

Figure 4. Vicious Circle of attrition

Increased Dissatisfaction

Reduced

Motivation

Lowered Efficiency

Employees Quitting

Low Perceived Value

VICIOUS CIRCLE

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Moreover, it gives rise to the prevalent gap in motivation in this industry as shown in Figure 5. BPO

industry is growing at a sweltering pace but the gap between the actual and expected level of

employee motivation in the industry is increasing due to the formation of a vicious circle. New

employees join the industry with excitement (because of big bucks and vibrant work culture) resulting

in higher levels of motivation. However, they soon get disillusioned as the realities strikes in.

Employee motivation gets a beating at a fast pace. Gap between the actual and expected level of

employee motivation increases as the employee spends longer time in BPO industry. The objective

concluded some findings about attrition through the way of motivation.

Figure 5. Motivation Gap

Motivational measures appropriate for BPO employees need a close examination and implementation

on a high priority. Thus, the first objective was effectively achieved as it resulted in the formation of

vicious circle of attrition and also gave a clear picture of the gap in motivation prevalent in the BPO

industry. The next objective aimed at exploring the dimensions of attrition based on the primary data

collection.

Low

Time Spent in Organization

Initial Level of

Motivation

Expected Motivation

Actual Motivation

Subsequent Level of

Motivation

Main Causal Agents for Depletion of Motivation: Low Perceived Value; Monotonous Work; High Salary Expectation; Unusual Working Hours; Disillusioned Employees; Stress and Burnout; Pressure to Perform on Metrics; Lack of Security and Social Interaction.

Level of M

otivation

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4.2 Primary Data Analysis

Objective 2. To explore and analyze the dimensions of attrition in BPOs based on primary data

collected from field survey.

The second objective was fulfilled with the help of a number of statistical analyses that included factor

analysis, regression, t-test, Duncan’s mean test, and correlation. In order to identify and evaluate the

factors behind attrition based on primary data, factor analysis was done. Principal component analysis

was the method of extraction. The Kaiser rule for number of factors to extract was applied. 8 factors

were extracted viz. dispirited perceptual factors, unfavorable working conditions, hostile

organizational culture, discontented personal factors, substandard nature of job, uncongenial

organizational support, low self-fulfillment, and mystified career path.

Table 3: Factors for attrition from factor analysis Factor Item Factor Loading Factor Name

1

• Low Perceived Value • Lack of Equality • Lack of Advancement Opportunities • Incompatible Policies

.8622

.8278 -.6494 .5026

Dispirited Perceptual Factors

2 • Dissatisfied with Working Conditions

.7693 Unfavorable Working Conditions

3 • Power and Politics • Dissatisfied with Colleagues • Lack of Teamwork

.7974 -.4809 .4482

Hostile Organizational Culture

• Dissatisfied with compensation • Personal Reasons • Dearth of self-motivation

-.8269 .6595 .6893

Discontented Personal Factors

5 • Lack of Skill Variety • Monotonous Nature of Job • Absence of Challenge

.5135

.5021

.8519 Substandard Nature of Job

6 • Irregular Working Hours • Emphasis on quantity over quality • Ineffective Supervision

.3608

.5456 -.4222

Uncongenial Organizational Support

7 • Lack of Autonomy • Achievement not recognized

-.4471 .8373

Low Self-Fulfillment Factors

8 • Poor Mentoring • Unsure of career growth

-.6229 .8151 Mystified Career Path

The next step involved computing the correlations between the independent variables and the

dependent variable in order to find out the relationship between the two. Substandard nature of job,

dispirited perceptual factors, discontented personal Factors, uncongenial organizational support, and

hostile organizational culture have significant correlations with the dependent variable that is

probability of quitting the organization. All the correlations are positive. It should be noted here that

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the dependent variable in the equation is the employee’s probability of quitting the organization and

all the independent variables are positively correlated with it. That means these pessimistic dimensions

like substandard nature of job, dispirited perceptual factors, discontented personal factors etc are

positively correlated with the employees’ probability of quitting an organization. The only three

variables which do not have a significant correlation are low self fulfillment factors, mystified career

path and unfavorable working conditions. That means it cannot be said with statistical significance

that probability of quitting increases with the increase of uncertainty of career growth or poor

mentoring or even achievement not being recognized.

Table 4: Relationships (Correlation coefficients) between factors of attrition, and probability of quitting the organization (N=500)

Factors of attrition Probability of quitting

Substandard Nature of Job 0.42**

Dispirited Perceptual Factors 0.30**

Discontented Personal Factors 0.23**

Uncongenial Organizational Support 0.23**

Hostile Organizational Culture 0.17**

Low Self-Fulfillment Factors 0.04NS

Mystified Career Path 0.03NS

Unfavorable Working Conditions 0.03NS ** Significant at .01 level.

Regression analysis was also done in order to find out the contribution of these factors to the stay of an

employee. Substandard nature of the job, discontented personal factors, uncongenial organizational

support, dispirited perceptual factors and hostile organizational culture are the main determinants of

attrition in the BPO industry. The value of multiple R is 0.60 and the value of r square is 0.36 in the

equation. It states that 36% of the attrition in a BPO is explained by these factors. An employee tends

to leave the organization because of the substandard nature of the job, discontented personal factors,

uncongenial organizational support, dispirited perceptual factors and hostile organizational culture.

Y= 1.78 + 0.38X1 + 0.42X2 + 0.34X3 + 0.33X4 + 0.09X5

Where, Y = Stay in the organization X1 = Substandard nature of job X2 = Discontented personal factors X3 = Uncongenial organizational support X4 = Dispirited perceptual factors X5 = Hostile organizational culture

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These dimensions were then compared across all the personal characteristics i.e. age, gender, marital

status and education. In the gender dimension, factors like dispirited perceptual factors, unfavorable

working conditions, discontented personal factors, monotonous nature of job, and low self fulfillment

factors had significant difference in the mean values of males and females. Dispirited perceptual

factors, discontented personal factors, and low self-fulfillment factors were ranked higher by male

employees.

In the marital status dimension, significant difference was found in the mean values of dispirited

perceptual factors, unfavorable working conditions, discontented personal factors, hostile

organizational culture, uncongenial organizational support and low self fulfillment factors.

Uncongenial organizational support, hostile organizational culture, low self-fulfillment factors,

discontented personal factors, and dispirited perceptual factors as factors responsible for attrition were

ranked higher by married employees as compared to unmarried employees.

In the education dimension, all the factors except for mystified career path had significant differences

in mean and standard deviation values between graduate and post-graduate respondents. Factors like

hostile organizational culture, uncongenial organizational support, and dispirited perceptual factors

were highly significant as compared to others. Hostile organizational culture, uncongenial

organizational support, monotonous nature of job, discontented personal factors, and unfavorable

working conditions were all ranked higher by graduates as compared to post graduates. Post graduate

employees ranked perceptual factors and self-fulfillment factors as important reasons for leaving an

organization.

In the age dimension, dispirited perceptual factors and monotonous nature of job showed highly

significant differences in mean and standard deviation values. Mystified career path, unfavorable

working conditions and hostile organizational culture were other significant factors. Organizational

culture, working conditions, nature of job was ranked highest by employees less than 25 years of age.

Dispirited perceptual factors along with mystified career path were ranked highest by employees more

than 35 years of age than other less aged employees.

When the dimensions were compared across the three tenure groups, uncongenial organizational

support, hostile organizational culture, low self-fulfillment factors, and discontented personal factors

showed significant differences in mean and standard deviation values. Unfavorable working

conditions, dispirited perceptual factors and substandard nature of job did not have any significant

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difference in the mean values or standard deviations. F value was highest in case of organizational

support. This factor was ranked highest by respondents with less than 1 year of job. Hostile

organizational culture, discontented personal factors, and mystified career path was ranked highest by

respondents with more than 3 years of experience. Employees with 1 to 3 years of experience ranked

low self fulfillment factors as the highest. Thus the second objective of exploring the dimensions of

attrition through primary data was successfully achieved.

5. Exploring the dimensions of employee retention

5.1 Dimensions of retention

Objective 3. To identify and explore the dimensions of employee retention in BPOs based on

primary data collected from field survey.

For the fulfillment of the third objective, a series of statistical analyses were done. It began with factor

analysis, followed by mean tests to compare the dimensions across various characteristics and ended

with the computation of correlations. In order to identify and evaluate the factors behind retention

based on primary data, factor analysis was done. Principal component analysis was the method of

extraction. The Kaiser rule for number of factors to extract was applied. All total 4 factors were

extracted viz. intrinsic motivation factors; hygiene; life interest and work compatibility factors; and

involvement factors.

Table 6: Factor Analysis of the factors of retention

Factor Item Loading Factor Name

1.

• Opportunity for personal growth and development in my job position.

• Opportunity in my job position to give help to other people. • Feeling of self-esteem a person gets from being at my

position. • Authority connected with my position. • Feeling of self fulfillment a person gets from being in my job

position (i.e. feeling of being able to use one’s own unique capabilities, realizing one’s potentialities)

• My role at the current job position. • Prestige of my job position inside the organization.

.8308

.4028

.7554

.5306

.8109

.4458

.6149

Intrinsic Motivation

Factors

2

• Amenities like housing, conveyance, medical benefits provided.

• Opportunity to develop close friendship in my job position. • Salary offered for my job position. • Facilities provided for effective working (lighting, air

conditioning, seating etc.) • Security of my job position.

.3075

.4998

.8405

.6316

.7643

Hygiene Factors

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3

• Feeling of worthwhile accomplishment in my job position. • Opportunity one gets to move ahead in life and become fairly

well-known and well-off. • Consideration given by the government to this profession. • Prestige of my job position outside the organization (that is

regard received from others not in the organization.)

.3053

.4692

.8048

.8696

Life Interest and Work

Compatibility Factors

4

• My overall involvement in the work • Sense of accountability for a person at my job position. • Opportunity in my job position for participation in the

determination of methods and procedures. • Opportunity for independent thought and action.

.3516

.3158

.7969

.6832

Involvement Factors

The dimensions of retention so formulated after the factor analysis were then compared across the

various personal characteristics of the respondents chosen for the study. On the basis of gender

comparison, extrinsic hygiene factors, involvement factors and life interest and work compatibility

factors had their mean values significantly higher in case of females as compared to males. On the

basis of marital status comparison, the mean value of involvement factor was higher in case of

married employees than unmarried ones. On the basis of education, all the factors except involvement

factors had significant differences in mean and standard deviation values between graduate and post-

graduate respondents. Life interest and work compatibility factors, intrinsic motivation factors and

extrinsic hygiene factors were all ranked higher by post graduates as compared to graduates. On the

basis of age comparison, extrinsic hygiene factors, life interest and work compatibility factors and

intrinsic motivation factors showed highly significant differences in mean and standard deviation

values. Extrinsic hygiene factors; life interest and work compatibility; and intrinsic motivation factors

were ranked higher by employees more than 35 years of age than other less aged employees. On the

basis of tenure groups, intrinsic motivation factor and life interest and work compatibility was ranked

highest by the respondents with more than 3 years of tenure. Involvement factor was ranked highest by

the second tenure group i.e. with 1-3 years of tenure in the present organization.

Relationships were also found out between the various retention factors and the perceived attitudes of

the employees. All the correlations had positive and significant coefficients, thus stating the fact that if

an organization is able to exploit the retention factors, viz. motivation factors, hygiene factors,

involvement factors, and life-interest and work compatibility, the employees can readily and

voluntarily express their willingness to continue.

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5.2 Regression Model for retention

Objective 4. To develop a regression model for escalating the stay of employees in BPOs and give

recommendations for the same.

For the fourth objective, regression analysis was done. The dependent variable was sustenance in an

organization, and the independent variables were personal characteristics viz. age, gender, education,

marital status, and retention factors viz. motivation factors, extrinsic factors, involvement factors, and

life interest and job compatibility factors. All these eight factors were put in the model as independent

variables and willingness to continue in the organization was put as the dependent variable. Intrinsic

motivation factors, employee involvement factors, age and education are the main determinants of

retention. The value of multiple R is 0.60 and the value of r square is 0.36 in the equation. It states that

36% of the retention in a BPO is explained by these factors. An employee’s sustenance in an

organization can be rightfully explained by these factors.

Y= 1.78 + 0.47X1 + 0.15X2 - 0.13X3 – 0.11X4

Where,

Y = Stay in the organization

X1 = Intrinsic Motivation Factors

X2 = Involvement Factors

X3 = Age

X4 = Education

After forming the regression model, value for each respondent’s willingness to stay in the organization

was calculated. These predicted values were then compared to the actual values as given by the

respondents. There was a strong correlation between the actual and predicted values. The correlation

came out to be 0.659** which was significant at 0.01 level. Thus, on the basis of the regression model

it can be concluded that intrinsic motivation factors; and involvement factors are quite instrumental in

retaining the employees in an organization and at the same time, age and education negatively

contribute to the sustenance of the employees in the organization. Employee involvement is a proven

tool to motivate and retain employees and according to the result here, it can be constructive in the

Indian BPOs too. In the West, there has been ongoing interest in getting workers more involved in

various processes, such as decision-making and information sharing. Employee participation adds to

employees’ growth needs and sense of achievement through a healthier deployment of their dexterity

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and potential. Employee participation in planning and decision making and in articulating new policies

also acts an important tool to improve employee motivation. Finding ways to intrinsically motivate

employees to improve effectiveness and performance can have long lasting impact on their sustenance

too.

Based on the two dimensions i.e. motivation and involvement which, according to the regression

model, significantly contribute to the sustenance of an employee in the organization, employees can be

broadly classified into four broad categories. There are people who are woefully inadequate in both

dimensions i.e. neither are they involved in the work, nor are they motivated to perform. We may call

such people as ‘detached’ who leave the organization for no rhyme or reason, hence extremely

difficult to be retained. Next comes the 'disgruntled’ who get involved in the given assignment but

lack aspiring motivation. Such people are moderately to highly difficult to be retained as they lack in

the basic intrinsic motivation. The other two segments comprise of ‘strugglers’ and ‘stars’ who are at

the higher end of the motivation continuum. The former may be relatively lower in their involvement

as compared with the latter. ‘Strugglers’ lack involvement but have a high degree of intrinsic

motivation, because of which they struggle hard to work. It is moderately difficult to retain them. The

ease and art lies in fulfilling their involvement needs by expanding their responsibilities, empowering

them, making them involved in decision making etc. ‘Stars’ are highly motivated and highly involved

in the work, and thus they are the easiest to be retained. ‘Disgruntled’ and ‘strugglers’ are the focus

segments, which a company would not want to lose. They need to be enhanced, protected, valued and

retained by pulling away all the non-retentive forces and kicking the retentive forces into high gear.

Figure 4: Involvement vis-à-vis Intrinsic Motivation: Effect on employee retention

High

High

Low DETACHED

Uninvolved and demotivated employees

Highly Difficult to retain

STARS Highly involved and highly

motivated employees Easy to retain

Invo

lvem

ent

DISGRUNTLED Highly involved but demotivated

employees Moderately to highly difficult to

retain

Intrinsic Motivation

Low

STRUGGLERS Uninvolved but highly motivated employees

Moderately difficult to retain

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5.3 Model Validation

Objective 5. To assess the existing level of employee motivation and validate the model by

studying the impact of recommendations on a small patch.

For the final validation of the regression model, a small patch test was done on a sample of 50

employees in Intelnet Private Ltd. Few concrete recommendations were made to the process manager

of this BPO and he was asked to stringently apply these recommendations. The employees chosen for

this study were the ones who had said they would leave the organization if they were offered work

with the same pay elsewhere. Data which was collected, after three months of implementation, was

analyzed statistically. The response scores were put in the regression equation as derived from the

fourth objective and the resultant willingness to stay in the organization was calculated. The

comparison with their original scores clearly revealed that there was an escalation in the scores. Also,

the predicted scores and the actual scores of the willingness to continue in the organization was put

under correlation. It was found that both the values were strongly and significantly correlated with

each other, with coefficient as 0.66**. Finally, employees were classified under four broad categories

based on their level of involvement and motivation viz. detached, disgruntled, strugglers and stars.

6. Conclusions

6.1 Analogy with established theories

The regression model for the retention of employees in a BPO explains two important factors i.e.

intrinsic motivation factors and involvement factors. This result is robustly analogous with all the

prevalent and established theories of motivation viz. Herzberg’s theory, Maslow’s theory, Alderfer’s

Theory, McClellend’s Theory. According to all these theories, the higher order needs revolve around

self esteem, or self-actualization in one way or the other. According to Maslow’s theory, the higher-

level needs are self-esteem and self-actualization. Only when one need is satisfied, another higher-

level need emerges and motivates the person to do something to satisfy it. A satisfied need is no longer

a motivator. Only the next level of needs in the hierarchy will act as motivators. Once a level of needs

has been satisfied they no longer act as motivators and the individual then directs attention towards the

next level of needs in the hierarchy. Herzberg draws a parallel with Maslow’s theory but with a subtle

difference. According to his theory, motivator factors are factors that are intrinsic to the job, such as

the content of the work itself and the availability of opportunities for responsibility, advancement and

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recognition for achievement. The motivator factors, which Herzberg described as “complex factors

leading to this sense of personal growth and self-actualization”, would then be able to act on that

employee and increase job satisfaction and productivity. Thus, according to this theory, in order to

motivate workers towards higher productivity, it is important to ensure that the motivators are utilized

to arouse the instinct of the employees. Herzberg’s motivator and hygiene factors can be mapped onto

Maslow’s hierarchy of needs with the motivator factors corresponding to the higher order needs of ego

and self-actualization.

Next, according to Alderfer’s ERG theory, growth needs involve the intrinsic desire for personal

development and include the intrinsic element of Maslow’s esteem category as well as self-

actualization needs. Finally according to McClellend’s theory, people with a high achievement need

have a compelling drive to succeed. They strive for personal achievement rather than rewards and

have a desire to do something better or more efficiently than it has been done before. They seek

situations where they can attain personal responsibility for finding solutions to problems, where they

can receive rapid feedback on their performance so they can tell easily whether they are improving or

not, and where they can set moderately challenging goals.

The established theories correlate motivation with performance and productivity. The study done here

finds the correlation between motivation and willingness to continue in the organization. It is an

established truth, that if the employee feels intrinsically motivated to work and also engenders sense of

belongingness and involvement with his work, he is likely to stay longer with the organization. The

intrinsic motivation factors take account of the feeling of self-fulfillment, prestige inside the

organization, opportunity for advancement, opportunity for growth, authority connected, feeling of

self-esteem, role at the current job position and opportunity to help others. Factors like self-fulfillment,

self-esteem, prestige, advancement, growth and authority are closely connected with the higher order

needs of Maslow and Herzberg and growth needs or need for achievement by Alderfer and

McClellend respectively. Figure 17 gives a pictorial representation of the close correspondence of the

various need-based theories and the intrinsic motivation factors responsible for retention of BPO

employees. Thus, in a BPO job, in order to retain employees it is important to infuse the sense of

fulfillment and esteem, by giving recognition, independence, job variety, expanding the span of their

control. Their career graph has to be judiciously managed so as to provide them with a lucid picture of

their growth and sustainability in the organization. Authority renders empowerment and empowerment

inspires a positive feeling for the job and organization to the employee. All these factors, along with

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ingraining a spirit of involvement in the employee, can actually be utilized to retain the employees for

a fairly longer term.

6.2 Implications of the Study

Based on the conclusions derived after the in-depth and comprehensive study, few implications can be

made about employee retention. Employee retention is vital to the long term health and success of any

business organization, especially in case of BPOs where the organizations spend so much in the

recruitment and their initial and on going training of the employees. Organizational issues such as time

and investment involved in training; knowledge lost due to attrition; mourning and insecure coworkers

and a costly replacement of candidate costs a lot to the organization. Employee retention does matter.

The concept of employee retention should be very distinctly understood and realized by organizations.

The retention strategies designed should be such that the retentive forces are maximized and the

debilitating forces minimized. Attempt should be made not to orchestrate the retention strategies in

isolation but ensuring that it forms a part of the overall strategies for fortifying the pull on the human

talent, which include sourcing, staffing and development strategies in addition. It should also be noted

here that retention policies should be highlighted at par with other policies so as to ascertain that the

employees feel they are highly valued. Once the employees working in the organization are made to

feel that the organization holds high degree of attachment towards them, it shall be easy to incorporate

retention strategies. The organization should inculcate the value of people asset and the duty of

retention across all levels.

Many BPOs are adopting some fundamental actions to retain employees, including salary

surveys to stay shoulder to shoulder of the market, culture-building exercises for employees,

exit interviews, counseling, employee development programs, rewards and recognition, as well

as increased pay and benefits.

Inculcating the retention culture

The most important aspect of inculcating the retention culture is to emphasize upon the employees that

the organization values them. Culture of retention should prioritize the I-I-I model i.e. Introduce-

Inculcate-Involve. The details are as follows:

• Introduce to the employees that the organization holds high degree of attachment towards them

values them and believes in sustaining them.

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• Inculcate the culture in the organization communicating to the employees that retention of

employees is not just a segregated task of the H.R, but is the responsibility of the whole family.

Season the work culture that is in sync with the philosophy of retaining the employees.

• Involve employee more in planning retention strategies as coworkers understand better than

supervisors.

Few ways to create a culture of retention should include taking care of the intrinsic motivation needs

of the employees, and involvement factors. For creating a culture of retention in the organization the

following should be kept in mind:

Even the ordinary has something extraordinary: No role within the organization should be viewed

as "ordinary". Everyone should be given the opportunity and the goal of being extraordinary.

Create a mission, act upon it, and feel proud about it: A mission which a team can take pride in

should be created.

Shape up a free atmosphere; break away redundant policies: People should not be strangled by

micro-managing or by burying them in policies and procedures. Only the necessary guidelines and

tools should be given. A free and liberated atmosphere should be given to the employees. Celebrate

activities, not just performance. Small little progresses should also be celebrated and recognized.

Activities, efforts, and modest improvements instead of big results should be noted and praised.

Create, Innovate, and Designate: Empowering employees for decision making, innovation and

creativity is the key to foster a positive atmosphere and enhance employee involvement. Allowing the

employees to play, have fun and experiment with newness; encouraging them to contribute to others

(employees, customers and the community) in extraordinary, innovative and novel ways; designating

employees with expansion of their responsibilities horizontally, and empowering them can have

multiplying effects on the loyalty of the employees.

6.3 Recommendations: Developing Retention Strategy

Organizations should have a proactive retention strategy which helps in reducing employee turnover.

Retention plan strategies should be different for different level of employees, because their roles are

different; their needs are different; what motivates them are different and what makes them leave are

also different. Based on the study it has been seen that dimensions of satisfaction and motivate are

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significantly different for employees on the basis of age, gender, marital status and education. Then,

the regression model revealed that intrinsic motivation and involvement factors, as well as age and

education level contribute to the sustenance of employees in the organization. Thus based on the

findings, it can be said if the employees are motivated and involved in the work they can be retained.

The ease of retention would depend on their degree of motivation and involvement. It is desirable to

plan employee retention strategy by an organization, which should cover following aspects:

• Reciprocity is the key. Employees are investors in the company and expect a return on investment.

The return can be in the form of recognition, empowerment and authority.

• Retention must be part of the organization’s DNA. Successful organizations have woven retention

and engagement deeply into their structure.

• Loyalty is never given. Loyalty must be earned; even satisfied employees sometimes leave.

Therefore, develop sense of loyalty among the employees.

• Organizations must be seen as employers of choice. One has to compete on compensation and

benefits, but win on culture, learning and development.

• Stars include more than just the top 10% -- or 1%! Stars are people at any level who sustain in the

organization and bring value to it.

• Each generation of employees has different reasons for staying. For the first time in modern

history, there are varied generations working side-by-side in most companies of this industry.

Generational differences continue to pose new challenges to today’s employers. Thus, retaining

them needs a generation-centric approach.

• Mentor widely and in both directions. Build learning relationships in all directions and hold all

partners responsible for the success.

• Train intelligently. Provide on-going retention training in manageable bites – make it a continuous

effort and find ways to size the retention plan to the specific demographics of the organization.

• Create a development culture. “Career development is the right thing for the organization

(identifying and developing future leaders), the right thing for the employee (creating a

development environment), and a key retention component.”

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• Recognize managers who keep employees. Meaningful recognition remains a potent energizer for

employees and managers alike.

6.4 Limitations and scope for further research

The research study is limited to a few aspects. Firstly, the study has considered only limited variables

while assessing attrition, retention, and other perceived attitudes of the employees. Secondly,

measuring attitudes of respondents is quite subjective. Although great care was taken for precision, yet

there may be certain gaps which need to be rectified. Thirdly, the model needs to be tested on a larger

dataset. Although dozens of letters were sent out to companies asking whether they would be willing

to take part in this research, only two organizations have so far agreed to do so. Perhaps many felt that

the domain of attitudes like involvement, motivation and satisfaction of their workforce (or perhaps

lack of it) was a sensitive area and believed that it would reflect poorly on the organization. However,

if more variables are taken into consideration, and if the questions used to measure the respondents’

attitudes toward work are re-evaluated and adjusted, a better result can be attained.

It should be noted that the study was conducted in the National Capital Region (NCR) of India.

Further research can be conducted by adding a couple of facets to it. The study can be replicated in

other sectors where attrition has become a common problem. IT industry has close similarities with

that of a BPO industry with an equally alarming rate of attrition. Similar study can also be done in

sectors like hospitality, infrastructure, retail, education etc. as intrinsic motivation becomes a pillar for

performance, loyalty and eventual sustenance almost everywhere.